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Govt spending drops 2.0% in Sept qtr

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AAP

2012-12-04

Government spending fell in the September quarter, figures from the Australian Bureau of Statistics (ABS) show.

Total government spending, including consumption and capital formation (investment), was down by 2.0 per cent in seasonally-adjusted chain-volume (inflation-adjusted) terms in the quarter, according to ABS data released on Tuesday.

The estimates correspond to the public sector spending aggregates accounting for about a quarter of gross domestic product (GDP).

Accordingly, this fall in government spending will trim about half a percentage point from GDP growth in the quarter.

The September quarter estimates for government spending will be included in the national accounts, due to be released on Wednesday.

Within the total, general government final consumption spending fell by 0.4 per cent in the September quarter, the ABS said.

General government gross fixed capital formation - investment in productive capacity - fell by 18.1 per cent, while gross fixed capital formation by public corporations jumped by 19.9 per cent.

Total public sector gross fixed capital formation (general government and public corporations combined) was down by 8.2 per cent in the quarter.

The previous national accounts showed total public sector spending rose by 1.9 per cent in the June quarter.

But, after revisions, the figures now show no significant change, implying a possible downward revision to the 0.6 per cent quarterly rise in GDP previously reported for the June quarter.

Separate data released by the ABS on Tuesday showed a positive contribution from foreign trade in the September quarter, with exports up 0.8 per cent and imports up just 0.1 per cent in real, seasonally-adjusted, terms.

That will add a tenth of a percentage point to GDP growth for the September quarter.

Garry Shilson-Josling, AAP Economist